Regional Coal: India's coal imports dip in June amid weaker power demand

India's seaborne thermal coal imports declined to a four-month low in June 2024, reflecting subdued power demand as monsoon rains spread across the country, dampening temperatures, according to a report by thehindubusinessline.com.

Analysts anticipate further decreases in imports throughout July and August, with expectations of a seasonal rebound in September 2024.

Energy intelligence firm Kpler reported a significant 22.8% month-on-month drop in India's thermal coal imports, used predominantly in the power sector, totaling 13.62 million tonnes (mt). This interrupted a five-month upward trend that saw imports rise from 13.53 mt in January to a peak of 17.57 mt in May. Year-on-year, imports edged up by 1.4%.

India's coal-fired power plants operated at a lower plant load factor (PLF) of 74.90% in June, down from 77.17% in April and 76.48% in May 2024, according to data from the National Power Portal.

Read also: Regional Coal: India's coal stocks surge in June

Alexis Ellender, Lead Major Dry Bulks Analyst at Kpler, noted, "Indian seaborne thermal coal imports sharply slowed in June, declining by 3.95 mt month-on-month to 13.62 mt, aligning closely with levels seen a year ago. The magnitude of this decline exceeded expectations."

The extension of a blending directive, aimed at increasing coal imports by utilities, is expected to bolster seaborne demand. However, a reduction in blending requirements from 6% to 4% indicates easing concerns over supply constraints, Ellender added.

"Despite recent drawdowns, stockpiles at power stations remain approximately one-third higher year-on-year, tempering immediate demand," Ellender explained. "With robust domestic production growth and subdued earnings for dry bulk vessels on the Indonesia-India coal routes, a significant recovery in Indian coal imports in the near term is unlikely. Imports are anticipated to remain muted through August, with a seasonal uptick anticipated in September. Quarterly import volumes are projected to show modest annual growth."

Despite soaring temperatures and heightened power demand during India's summer months (April-June), prices on power exchanges remained stable year-on-year. The Indian Energy Exchange (IEX) highlighted in its June 2024 commentary that proactive measures by government and regulators, including surplus power sales on exchanges and ensuring adequate fuel supply and generation unit availability, stabilized exchange prices.

Editing by Reiner Simanjuntak